Poor People's Bad Decisions a Result of Being Overwhelmed
Financial status or being poor is linked to one's ability to think, according to a study released Thursday.
The study published in the Journal of Science claimed that those who are dealing with severe financial stress don't have the capacity to deal with all of their life's trouble.
A series of tests done by the researchers showed that when people are flushed with cash, they can stop worrying and make better decisions.
However, being faced with financial woes takes up so much of their attention that they end up making poor decisions.
"When you are very, very focused on what you don't have enough of, you do all you can do to get more of it, at the expense of other stuff," said research author Eldar Shafir of Princeton University.
The research team has been trying to figure out why people who are poor seem to exist in a vicious cycle of poverty.
Researchers found that one of the biggest reasons is that being poor takes up so much of their attention.
"Imagine you're sitting in front of a computer, and it's just incredibly slow. But then you realize that it's working in the background to play a huge video that's downloading. It's not that the computer is slow, it's that it's doing something else, so it seems slow to you. I think that's the heart of what we're trying to say," said Harvard economist Sendhil Mullainathan.